After many twists and turns, the U.S. Securities and Exchange Commission (SEC) has finally approved multiple Bitcoin spot ETF applications, marking a new era for BTC. However, many people believe that there will be a price correction period after the ETF is approved. This article is sourced from Rimon Sato.
Tweet, organized and written by BlockBeats.
(Summary:
Satoshi Nakamoto writes a Bitcoin script? Spot ETF approved on the same day as the “first transaction 15 years ago”
)
(Background:
Bloomberg predicts that the first day of Bitcoin spot ETF will attract “4 billion US dollars”, half of which will come from BlackRock
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Table of Contents
Issue 1: Reasons for forming a top
Issue 2: Issues regarding BTC spot ETF
Issue 3: Interpretation of medium-term trends and trading strategies
Trading Strategy
On the early morning of the 11th, the U.S. SEC announced the approval of 11 Bitcoin spot ETFs. At 7 o’clock, Bitcoin briefly broke through $47,000; as of the time of publication, the price has fallen to $46,102.
After the highly anticipated Bitcoin spot ETF landed, the market has different views on the current market trend. Some people believe that Bitcoin is about to enter a bull market, while analysts suggest that the market will undergo a new round of adjustments after the recent positive news, potentially leading to a downward trend. Analyst Rimon Sato in the crypto field shared his views on X, and the main points are summarized as follows:
Issue 1: Reasons for forming a top
1) There is a significant amount of profit-taking funds.
This is a prerequisite, which means that there is a considerable amount of selling pressure in the market. After nearly 3 and a half months of market performance, most cryptocurrencies have experienced significant increases in value. Some have increased by several tens of times, while medium-sized market cap coins have increased by 10 times, and large market cap coins have generally increased by 2 to 3 times.
2) Exhaustion of capital inflows, and main funds have started to withdraw.
In December, we experienced the climax of certain cryptocurrencies, the major surge of Solana, the DeFi market, Layer2, and the Polkadot ecosystem. It is evident that the upward momentum will continue to decrease. When the subsequent sectors rise, the previously rising sectors will begin to decline. This is because the capital for future purchases has been exhausted, and most of the market is in a long or leveraged position, so they need to sell one coin to buy another.
These two phenomena clearly indicate that the purchasing power of funds is gradually diminishing. From the perspective of capital, a market will go through three stages:
– Gradual exhaustion of capital inflows
– Exhaustion of capital inflows, internal capital games
– Realization of profitable funds, withdrawal of main funds. This means that the amount of money remaining at the gambling table is getting smaller.
3) Retail investors generally have a bullish view.
Currently, there are no prominent Key Opinion Leaders (KOLs) on Twitter who are bearish on the market. At most, the opinion is that there may be a correction to $42,000 and then a continuation of the rise. Within various groups, the sentiment is generally bullish, and positions are relatively heavy. A cruel fact is that retail investors are the last ones to buy in. This means that when retail investors who buy in last have heavy positions, there will be no more funds available to enter the market.
In short, there is a strong deviation between the bullish sentiment and the actual fund situation.
Issue 2: Issues regarding BTC spot ETF
1) BTC spot ETF is a long-term substantial positive development, which can bring in more funds to purchase BTC. In the short term, it is a positive development in terms of news. It will short-term stimulate the price of BTC. However, we must be aware that the approval of the ETF does not immediately result in a large amount of off-exchange funds entering the market.
Spot ETF is just a purchasing channel, although this channel connects a large number of influential funds. These are experienced funds who consider whether to buy based on the right position and the right price.
Therefore, after being able to purchase in compliance, they still need to assess whether BTC is worth entering. So, I believe that the ETF is somewhat similar to Grayscale’s GBTC in 20 years. They are boosters of the bull market, but they are not the reason for starting the bull market.
2) This market trend is initiated by the ETF. If you recall three months ago, no one in the market expected BTC to rise to $48,000. This height is not much different from the peak of the bull market in 21.
Because it is still far from the expected 25-year bull market time, and from the perspective of external financial markets, the U.S. Federal Reserve is in a period of interest rate hikes. So obviously, some people with insider information and accurate analysts saw the approval of the ETF and promoted this market trend. Since this is the case, when the ETF is approved as scheduled, it is the time for them to take profits.
Issue 3: Interpretation of medium-term trends and trading strategies
In this medium-term downward trend, where should we adjust?
It is difficult to say. BTC may undergo a correction of about 20% to 30%, attracting a lot of funds to enter. However, altcoins may not fare well, and the correction will likely be more severe, especially for those with significant increases, experiencing a deep correction is normal.
Moreover, if the external market is not good, such as a major plunge in the U.S. stock market, the pullback of BTC will be much higher. The possibility of another 3/12 is not ruled out.
Trading Strategy
1. In terms of positions, it depends on individual risk preferences and varies from person to person. Keeping 20% to 60% is okay, mainly for long-term positions. Those with a higher risk preference can keep more.
2. For coins with heavy positions, you can sell some in the recent days to reduce positions. It is important to note that it is not advisable to sell for profit. It is incorrect to hold onto losing positions. Consider:
– For those who want to hold long-term, it is advisable to keep more.
– For coins that have experienced a significant decline since the beginning, and have rebounded due to positive news, it is recommended to sell. This is because the main funds have already exited and there are more trapped holders, making it difficult for these coins to reach new highs.
– For recent hot topics.
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